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Monday, October 1, 2012

Getting Back to Business

As go airframe OEMs, so follow the avionics suppliers. And both see some recovery in the business aircraft market.

By Robert W. Moorman

After several years of poor sales, the market for new business aircraft seems to be improving for OEMs and their avionics suppliers.

In May, Cessna announced with great fanfare the launch of its new long-range business jet, the Citation Longitude. Six months earlier, the company launched the mid-range Citation Latitude. The Longitude and Latitude will gradually replace the Citation X. The Longitude will become Cessna’s flagship large-cabin airplane, and will cruise at Citation X-speed on a brand new wing.

Also in 2012, Bombardier Aerospace launched the new Learjet 70 and Learjet 75 light jets, which are upgrades of the current 40XR and 45XR models.

While the launches could benefit Cessna and Bombardier, do they represent a solid recovery in the business aircraft market? The answer to that question depends upon whom you ask; most analysts and industry insiders believe the recovery is underway, but just barely.

“The recovery is just starting,” said Claudio Camelier, vice president market and product strategy at Embraer Executive Jets. “We won’t see a huge difference in terms of aircraft deliveries this year and part of next.”

To some industry observers, these launches are more about remaining competitive than responding to an improving market. Business aircraft manufacturers must refresh their product offerings regularly, including upgrading the avionics. Not doing so, the OEMs run the risk of competing with themselves. Look to the healthy business aircraft aftermarket for proof of that.

Cessna’s two new business jets could signal a return to the old Cessna. At one time, the Wichita, Kan.-based plane maker would make some kind of product announcement annually and launch a new general aviation or business aircraft every seven years. But when the market turned south in 2008, Cessna’s long-time marketing and sales playbook was left in the locker room. Parent Textron began reducing staff as well as important research and development (R&D) funding.

In 2009, Textron cancelled the Columbus Citation business jet program because of mounting R&D and pre-production costs. With the Longitude and Latitude launches, Textron is, in effect, allowing Cessna to return to its original business model, although R&D funding for future aircraft programs would still be hard to come by, Textron Chairman Scott C. Donnelly said in a recent earnings call.

“It’s becoming clear that business jet manufacturers are increasingly competing on price, due to a long-term market down cycle,” said Richard Aboulafia, vice president of analysis at The Teal Group. “They also help speed new model introductions, which manufacturers need to stimulate demand.”

But some customers are not yet willing to commit millions of dollars to a new aircraft. “Conservative business jet users are increasingly looking to upgrade their existing equipment rather than buy new planes,” Aboulafia continued. “Catering to them with new avionics packages is a smart move for avionics and upgrade houses alike.”

Avionics manufacturers, including Honeywell, Rockwell Collins and others, are seeing healthy growth on the retrofit side, with business jet operators looking to extend the life of their aircraft by adding new avionics capabilities, particularly as it pertains to connectivity and FAA’s NextGen airspace modernization initiative.

“We’re seeing adoption of NextGen air traffic management technologies in business aviation WAAS [Wide Area Augmentation System], RNP [Required Navigation Performance], LPV those technologies and those upgrades are popular,” said Carl Esposito, vice president of marketing and product management at Honeywell. (Honeywell will release its much-anticipated annual business aviation outlook report on the eve of the National Business Aviation Association’s (NBAA) conference and exhibition in Orlando, Fla, in late October.)

On the forward-fit side, avionics OEMs are expressing some cautious optimism with regards to the overall market.

“Recovery is not as robust as we and the OEMs thought it would be at this point, which I believe is a reflection of the state of the global economy. This has had a particularly significant impact at the light end of the market where our OEMs are still struggling to fill orders and build backlog,” Rockwell Collins CEO Clayton M. Jones said in late July during the company’s latest earnings call.

The business aviation market has struggled in recent years to climb back to the peaks seen in 2008. But, despite the lackluster overall economy, there have been some bright spots. International demand, particularly in Asia, the Middle East and South and Central America, has been gaining steadily.

Large cabin class business jets are doing relatively well, while the mid-size business jet market continues to suffer. The light jets were doing well until a year ago, but it too is floundering, in part, because there are great deals to be had in the aftermarket.

When the recovery for business aircraft does come, it could be a mixed bag for avionics manufacturers. “With the market recovery [for business aircraft], the landscape for avionics manufacturers will be different,” said Camelier. “Some will gain in market share, while others’ share will be reduced.”

Others agree. “There is a shift in the avionics market of Garmin moving upscale into the business jet world,” said Brian Foley, an aviation analyst that tracks the business aircraft market.

Avionics Developments

Garmin’s aircraft avionics business has improved over time, irrespective of the fledging recovery. Both the Longitude and Latitude and the two new Learjets feature the Garmin G5000 touch screen digital avionics suite.

Bill Stone, avionics product manager, said Garmin’s strategy has always been to be a “full line supplier serving multiple markets. “We see strength in diversification,” he said.Those diversified markets include aviation, marine, outdoor recreational and automotive. Garmin provides avionics for everything from bass boats and mega yachts to cruise liners and business aircraft.

Garmin’s initial foray into business aircraft market for both fixed and rotary wing was through the sale of GPS systems. But company leaders learned quickly GPS alone would not sustain profitability. So, it began producing advanced integrated systems that could be sold as one package. Garmin’s target market was the light and mid-size business aircraft, as well the retrofit market, including rotorcraft, which Stone said “has been woefully underserved for many years.”

Stone said Garmin’s aviation segment overall is growing at around “3 to 4 percent annually,” although the OEM forward-fit market is down from a year ago. The retrofit market continues to improve, he said.

Garmin continues to invest in new products. At EAA AirVenture Oshkosh in July, Garmin made several product announcements. One offering was a suite of certified and portable Automatic Dependent Surveillance-Broadcast (ADS-B) options for aircraft owners to satisfy the NextGen mandate for ADS-B Out; it also unveiled products for ADS-B In, including high-integrity traffic and subscription-free weather information.

The G5000 integrated avionics package for the Longitude and Latitude and the Learjet 70 and 75 comes equipped with capabilities required to comply with emerging operating requirements for intercontinental aircraft, including Future Air Navigation System (FANS)/Controller Pilot Data Link Communications (CPDLC), ADS-B and Required Navigation Performance (RNP). The G5000 can be configured and upgraded to supply NextGen, SESAR and other air traffic modernization initiatives worldwide.

Bombardier has developed the Global Vision Flight Deck, which combines technological advances with a more aesthetic functional cockpit. The Rockwell Collins-based Vision Flight Deck is featured on the Global 5000 and Global 6000 ultra long-range business jets. The mid-range Learjet 70 and 75 features the Garmin G5000 digital avionics suite on the Vision Flight Deck.

Pro Line Fusion for the Vision Flight Deck on Bombardier Global aircraft features four 15-inch diagonal active matrix LCDs arranged in a T-shape. It works in concert with the Head-up Guidance System (HGS), personalized formats of display information, an electronic checklist, maps with graphical flight planning, an integrated cursor control panel, a Synthetic-Enhanced Vision System, paperless operation enabled by Dual Electronics Charts, FANS, CPDLC, WAAS, Localizer Performance with Vertical Guidance (LPV) and a MultiScan Weather Detection system.

In February 2012, Bombardier and Rockwell Collins received FAA and EASA certification for synthetic imagery on a head-up display as part of the Pro Line Fusion avionics system on the Vision Flight Deck of the Global 6000.

The Embraer Phenom 100 and 300 come equipped with the Prodigy integrated avionics system, which is based on the Garmin G1000 avionics, but is a far more powerful system. The Prodigy Flight Deck 100 comes with three 12.4-inch displays and no overhead panels due to “intelligent automatism.” Features include Synthetic Vision System and weather radar.

Both the 100 and 300 have a Central Maintenance Computer for key aircraft systems. Any malfunction detected onboard can be downloaded to a ground station via satellite data link, where maintenance technicians can evaluate the problem; order parts if necessary and meet the aircraft when it lands to address the problem.

Since both the 100 and 300 are certified for single-pilot operations, Embraer wanted the cockpit to be pilot friendly. So the avionics are simpler and easier to use. Embraer also follows the “dark cockpit” philosophy for the 100 and 300 by not having those avionics items illuminated if not needed.

The light to mid-size Legacy 450 and 500, which are currently in development, come equipped with the Rockwell Collins Pro Line Fusion, which is integrated with the full fly-by-wire packaged operated with side stock control. (The Dassault Falcon 7X and the Gulfstream Aerospace G650 and Embraer Lineage also have fly-by-wire capability.) Certification of the 450 is slated for late 2014.

Offering new mid-size business jets with advanced avionics in a down market is risky, but “we expect that the mid-size aircraft will see some recovery in the next few years,” said Camelier.

If Camelier’s forecast is correct, the 500 and 450 will enter the market as the recovery hits full throttle. The 500 is slated to enter service by the end of 2013, the 450 a year later.

Embraer is also offering the Legacy 600 and 650 in the super mid-size and large jet category. These aircraft are highly modified versions of the ERJ 135 and 145 regional jets. The 600 and longer range 650 have more powerful engines and greater range.

The ERJ 135 and 145 came originally with the Honeywell Primus 1000 CRT avionics package. Embraer upgraded the flight deck of the 600 and 650 with the Primus Elite avionics package with LCD display. Primus Elite on these two aircraft can come equipped with coupled Vertical Navigation (VNAV), RNP 0.3, charts and map capability, XM weather capability, WAAS/LPV, CPDLC FANS 1/A, Electronic Flight Bag and Smart Landing and Smart Runway.

The Lineage 1000, Embraer’s ultra large cabin business jet, which will compete with the Boeing BBJ and Airbus ACJ, comes with the Honeywell Primus Epic package. The Lineage has Class II Electronic Flight Bag, auto throttle and auto land capability, Enhanced Ground Proximity Warning System (EGPWS) with windshear detection, satellite communications and other features.

The long-range Gulfstream G650 also comes with the Honeywell Primus Epic integrated avionics system with its SmartView synthetic vision system as standard equipment. Other systems include Honeywell’s IntuVue 3-D weather radar. The latest version of IntuVue include new capabilities to detect turbulence, hail and lightening, up to 10 minutes in advance of approaching storm cells in the flight path of the aircraft.

Honeywell’s Primus Epic-based EASy II software package obtained FAA certification in May 2011 for the three-engine Falcon 900LX. EASy II will be certified sometime this year on the Falcon 2000LX and the Falcon 2000S. Falcon Jets equipped with EASy I can be upgraded to EASy II without much difficulty, according to Dassault.

The enhancements provided in the Dassault EASy II package include Honeywell SmartView synthetic vision and Required Navigation Performance-Approval Required (RNP-AR) system, which allows for more efficient routing.

SmartView relies on Honeywell’s Enhanced Ground Proximity Warning System (EGPWS), a terrain database with nearly 800 million hours on commercial air transport, business jets and helicopters operating around the world, according to Honeywell.

The Satellite Based Augmentation System-Localizer Performance with Vertical guidance (SBAS-LPV) is also available with EASy II. SBAS-LPV provides vertical guidance during LPV approaches, increasing navigation accuracy and availability.

EASy II is compatible with the European SBAS the European Geostationary Navigation Overlay Service (EGNOS) that allows more flights to carry out precision approaches at European airports safely and efficiently. EGNOS is similar to WAAS in the United States.

Also included with EASy II is Honeywell’s SmartRunway and Automatic Descent Mode features. SmartRunway is designed to help reduce the risk of a runway excursion by providing timely alerts to crewmembers when the aircraft is approaching the runway too high, too fast or is not configured properly.

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